Morgan Stanley on O'Reilly Auto Parts; Initiates PT at $175

In a research note released Monday, Morgan Stanley analyst Simeon Gutman initiated coverage on O'Reilly Automotive Inc.

with an Over-weight rating and a price target of $175. The analyst believes that the company's risk to reward ratio is favorable as the company continues to beat earnings per share estimates. The analyst stated, “Longer term, we believe the ingredients are in place for ORLY to achieve 20% EBIT margins by 2018 (versus 17.6% in 2014) The analyst continued by saying that there is major growth opportunities and ORLY offers the strongest square footage growth in auto parts retail at a growth rate of four to five percent. The analyst also expects ORLY to continue to lead the industry at a growth comp of at least four percent.